I question things which people take for granted. I would have been that kid who said the emperor was naked. In real life that kid would probably have been lynched, but I'll take my chances...
I believe truth inherently valuable, no matter how well intentioned the ideology it dispels may be.
I also write about random interesting things from my personal life.

26 April 2014

The
entire point of a corporation is concentrating capital, in order to
gain the benefits that increased capital give a business. Well, that,
and allowing the owners of the company to not be responsible for their
own actions ("limited liability"), which has its own set of ethical
concerns, but this whole essay series will be long enough without
getting too much into that.

It goes back to my first analogy - amid a free market place of individual buyers and sellers,
WalMart comes in and buys the entire lot that the market is on, and now
consumers no longer have any choice if they don't want to (or can't)
travel to the next town over.

In general the ability to
quickly, easily, and cheaply raise large amounts of capital is very good
for economic growth. The small individual entrepreneur would have to
work a long time with a small positive net income
in order to afford the large factor space, or machinery, or large
workforce they may need to expand operations - and ultimately, increase
efficiency via economies of scale.

This makes a lot of sense to encourage if you happen to be the government of a developing economy.

We - the United States - doesn't happen to fall into that category.

Economists
and politicians almost universally point to continued growth as the
solution to all economic problems, but the reality is, we are already
grown up. We don't need to grow anymore. There is (literally) more than enough to go around.
US
GDP per capita is approximately $50k, while living a comfortable middle
class lifestyle for a family living reasonably efficiently only costs
half that

Regardless
of what new technology brings us in terms of cheap energy and
environmental impact mitigation, we live on a finite planet, reaching
other planetary systems in a human lifespan would violate the most
fundamental aspects of physics, and so infinite growth is simply not an option.

We
are at (no - long past) the point where focus needs to shift away from
growth and onto sustainability of production and distribution of existing wealth.

As
such, the corporation has outlived its usefulness. It is still doing
what it's good at - allowing companies to grow increasingly huge, but
there is no longer any particular benefit to society as a whole.

The
extent to which economies of scale push down production costs is offset
by the forms that typical takes: capital allows corporations to invest
in overseas factories and domestic robots, cutting costs by reducing the
workforce. Since labor works in the same supply and demand style as
products, any job lost to automation or outsourcing ultimately lowers
wages across all jobs. In addition, corporate consolidation, as it eliminates competition by absorption, creates redundant job positions.
This increases system wide efficiency, but at the cost of labor wages,
as well as at the cost of competition, which is to the advantage of the
consumer.

This explains the flat line in real (inflation
adjusted) individual wages over the past couple decades, despite
massive increases in productivity per worker and its consequent
increases in total wealth - literally all the gains of increased
technology and other increases in efficiency have gone to the top 0.5%
(the upper half of the top 1%)

Note
that most of the increase in household income comes not from real
increases in average worker wages, but from women entering the
workforce, creating 2 earner households, plus an increase in total
working hours among all household workers.

As
there is less and less competition, there is little motivation for
companies to pass along gains in efficiency to the consumer in the form
of lower prices. Instead that profit all goes to the executives and shareholders.

Much
of the middle class think this is good for them, because they have
investments in the market - a 401K or IRA if nothing else. However, as
concentrated as total wealth is, stock wealth is even more concentrated
among the top 0.1% than total wealth.

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

Almost the entirety of the
benefit of the stock market goes to a small handful of extremely wealthy
individuals. Their snowballs are already so large, and moving so fast,
that they don't have to do any form of productive work to continue
getting richer, no matter how fast they spend.

The middle class
gets just enough share of the benefits to pacify them, but it makes no
sense to be happy with getting a few cents more in dividends every month
when the cost is several fewer dollars per hour in wages.

At the same time, many credit whatever companies happen to exist with "creating" jobs.